Should a technopreneur be an industry insider?
Is a technopreneur doing a startup in an industry sector that they know intimately, in a better position to succeed than one coming from outside the sector? This is a question that I have pondered over the years, and we experience both cases at Corniche, all the time.
An investor draws much comfort from a technopreneur who understands their sector and market backwards – understanding the endemic problems that need to be solved for. I have seen this with investors, but the opposite is also true – a technopreneur that does not know their space well is a real turn-off for investors.
Bill Gates famously started programming when he was in his 8th grade. By the time he dropped out of Harvard to start Microsoft in 1975, he was already a master of his trade. According to Malcolm Gladwell in his book Outliers, one needs to spend 10,000 hours in order to master a subject. He achieved this through working on borrowed time on mainframes mostly in the middle of the night. Bill Gates stayed in the software industry throughout his career.
The advantages of already being in a sector include understanding and being comfortable with the culture and also building up a valuable contact base. The disadvantage, if one has been in a sector for a long time, can be not seeing and challenging structural or endemic problems with fresh eyes.
One might think that a technopreneur may be at a disadvantage when doing a startup in a sector, without any background in that particular sector. This is the serial entrepreneur. Harvard researchers assert that a serial entrepreneur has a 30% chance of success in their next venture compared with a first-time entrepreneur, where it is 18%. Their explanation for this is that they “exhibit persistence in selecting the right industry and time to start new ventures”.
Elon Musk, part of the original PayPal “mafia” of founders that went on to be successful in many different sectors, is the quintessential serial entrepreneur, and now the 2nd richest person in the world. (Investopedia 27 October 2021) He went from payments to EVs (Tesla) to solar power systems (SolarCity) and space (SpaceX).
Investors do like technopreneurs with a successful track recording in founding, building and exiting startups. We believe that the key to success for the serial entrepreneur is to partner with an industry insider, combining their pure entrepreneurial skills with the sector knowledge, and preferably where they are on a similar footing, such as co-founders.
We have experienced wonderful technopreneurs from both inside and outside their industry sector achieving great success, and so it is time to put the question to bed – we believe that there is no inherent advantage, and it always comes down to the individual and the luck that they make for themselves.
